How to start a casino and lose money.
by, 18th January 2012 at 09:56 PM (118392 Views)
Running at a Loss.
It's been exactly six months since I opened the Bitcoin casino. When I started this thing, credibility was a real worry for me. I mean, I had none, and we opened it from Costa Rica, which doesn't really help. I committed to keeping a radical level of transparency, publishing all the card shoes and daily RTPs. But I thought I'd go a step further and share with you the actual balance sheet for what's happened so far.
The word "quixotic" has been running through my head a lot lately. Don Quixote, chasing windmills.
For all the press it's gotten, Bitcoin still hasn't really taken off. It spent the first four months being dragged through the mud, falling from $32 to $2 right after I roped my little brother into this and we opened our site. One day it was the darling of the tech media, the next day it was a punchline. Now it's creeping back. I had bought a few thousand dollars in Bitcoin to have on-hand for our opening, but I managed to sell most of them off in time, and by trading everything in and out of USD since then I've kept it so the hit from that wasn't nearly as bad as it could've been. But a lot of people with a lot of Bitcoins lost a fortune, and by September no one was holding it. Much less gambling with it. Only in the last month or so, since it crept back up to the $5-6 range, is business starting to pick up a little. Things were dead quiet from September 'til around Christmas.
Anyway, I thought I'd share the results of my little experiment. Keep in mind this doesn't include the external costs -- I spent 3 years programming it on my own time, then about $7k before opening it, plus $15k in for the initial float, and I've dropped $8,019.33 on servers and other bills since it opened. But I was ready for that. This is, I guess, the world's most expensive hobby after gambling itself. If I was a little crazier I could have bought a house boat and a year's supply of canvas, paint, absinthe and razor blades. But what I spent is peanuts next to an operator who needs to rent software from someone else.
So here are the raw numbers since July. I know it's pretty insane to publish this...but what the hell. Where else are you ever going to hear this from a casino? I know we're just a miniature little pygme Bitcoin thing over here, but what the hell. Some of these percentages, I think, are pretty accurate reflections of what the big boys see. Some of them are fantastically great, but that's because it's the only real casino in a very small market. And some of them reflect various acts of stupidity on my part.
I'll let you decide for yourself. I reckon reps have something to compare this to, so feel free to chime in with whatever you're allowed to say. Tell me what you think. Does this stack up? What needs to change?
Days in operation: 181
Unique visitors: 10,040
US play account signups (turned off in September): 494
Non-US real money signups: 298
Total Deposits: $4,898.71
Average Deposit size: $32.44
Average Deposited per depositor: $73.11
Average Deposited per real money signup: $16.43
Average Deposited per unique hit: $0.48
Depositors who re-deposited at least once: 46.26%
Depositors who re-deposited twice or more: 19.4%
Maximum number of deposits for one player: 14*
*A note about that last number. That's loyalty. But it's got a lot to do with Bitcoin's instant deposits and withdrawals, and the fact that there's no minimum deposit. Players can deposit as little as $0.05. The player in question collected and cleared a lot of bonuses, withdrew and waited for the next bonus to come along. He's up a few hundred bucks.
Table Drop (Total amount bet): $52,522.76 (10.72x churn rate).
Table Hold (Total amount kept by the casino): $2,140.42 (43.69% of deposits).
Comps, Cleared Bonuses and Freerolls: -$2,041.98
Current Progressive Pots: -$121.56
Bitcoin volatility and processing (amazingly): -$90.86
= Net Gaming Revenue: -$1,046.96
RTP of all games together, not including freerolls or bonuses: 95.92%
Actual RTP including freerolls and bonuses: 101.43%
Net Earnings per $1 deposited: -$0.21
Where'd I mess up?
First of all, I ran a lot of pricey poker freerolls in the first month that didn't attract the crowd I wanted. I haven't made a dime on poker. Actually, no one plays except for the freerolls. I lowered them from $100 down to $1.10 each and still get the same number of players - about 4. So that was a fail. If you take the freerolls out of the equation, the site almost broke even. Then there was the thing with bonuses. In the beginning, I'd set it up so that all bets counted towards WR, even if you didn't have an active bonus. More than that, I had it so that you could withdraw your original deposit anytime - right after getting the bonus, if you wanted to. That ended up costing somewhere around $800 before I changed it. Players have to clear the bonus now to withdraw.
All in all, without my rookie mistakes and the Bitcoin losses, I think I'd probably be up about $1000 on the games. Obviously not enough to cover the cost of the servers, but at least on the right track.
The site did hit #1 on a google search for "bitcoin casino". In a few countries, anyway. That was nice. On the other hand, most of the competition who were holding only Bitcoins tanked in the last few months, so we're pretty much the only one still in business.
So what now?
Well, right now we've only got about $562 sitting in player reserves. That's one of the good things about Bitcoin...people withdraw it right away, so I don't have to worry about having it on my books. I think I'm ironing it out and I'm on the right track, and I just need to be able to take other payment methods, to reach a bigger audience. For that, I'm looking for investment from a bigger, "real" casino who's willing to take a chance on a new platform, as a side project. I didn't mean this as a pitch -- I mean, who in their right mind pitches that their company's losing money, right? It's still doing a lot better than most of the internet startups I know about, who spent millions up front for a crummy product (color.com, for example). I'm not looking to sell out...this is my life's obsession, and I'm in it for the long haul. I'm getting myself motivated again for another round of writing new games, and there's a few great ones in mind (including one suggested by someone on the forum...but that'll be a surprise). I'd really like to hear the reaction of reps, though, so if you can't say anything here in the comments, please drop me a note.
I think the next few months will tell the real story, and so much of this depends on where the Bitcoin price goes, it scares me to have my baby at the mercy of that. But running the site still gives me a reason to get up in the morning. Mainly to work twice as hard at my real job, to pay for all this stuff. But I've still got a lot of hope.0 Thanks, 0 Likes
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